August Global Regulatory Brief: Trading and markets

The Global Regulatory Brief provides monthly insights on the latest risk and regulatory developments. This brief was written by Bloomberg’s Regulatory Affairs Specialists.

Regulatory authorities continue to advance initiatives to improve financial market structures. The following market structure policy developments represent a sample of wider regulatory and policy coverage available to Bloomberg Terminal customers. Run REGS <GO> to find out more or contact your Bloomberg representative to learn more:

• UK: FCA Publishes Findings on Off-Channel Communications at Wholesale Banks
• EU: Commission consults on updated technical rules implementing the MiFIR Review
• Brazil: Central Bank launches new framework for Credit, Financing and Investment Companies (SCFIs)
• India: SEBI proposes introduction of Closing Auction Session (CAS) in equity cash market

FCA publishes findings on off-channel communications at wholesale banks

Summary: The UK Financial Conduct Authority (FCA) has published its findings from a review into how eleven wholesale banks monitor and manage off-channel communications. While not proposing new rules, the FCA found firms have significantly enhanced their governance frameworks, surveillance practices, and use of management information in the past two years.

Context: The FCA considers effective communication surveillance and record-keeping critical to market integrity and dispute resolution. The review followed an information request and subsequent discussions with selected firms.

Key takeaways:

• Policy Enhancements: Firms updated policies to reflect new technologies (e.g., smartwatches), restricted personal numbers in corporate directories, and created helplines and training resources to guide staff on compliant communication.
• Surveillance Capabilities: Lexicons were broadened to detect emerging risks such as “channel hopping,” and to capture emojis, GIFs, voice notes, and video messages. Natural language processing and AI were introduced to improve detection accuracy.
• Monitoring Gaps: Low usage of approved apps was sometimes used as a proxy for potential off-channel activity.
• Device Strategy: Most firms issued corporate devices, some using colour-coding to distinguish them in sensitive areas like trading floors.
• Third-Party Risks: Increased reliance on third-party surveillance vendors was noted, with challenges including outages, data reconciliation failures, and incomplete recordings. The FCA reminded firms that oversight responsibility remains with them.
• Management Information: Sophisticated MI included breach tracking, project updates, and analysis of device usage and trends.
• Breach Data: Across 12 months, 178 policy breaches were reported by eight firms, with three accounting for 131. Not all breaches involved violations of FCA rules.
• Enforcement: Sanctions for internal policy breaches included bonus caps, promotion delays, and dismissals, though the FCA found no use of the most severe penalties.
• Training: Role-specific, scenario-based training using real incidents was a key compliance driver.

Next steps: The FCA will continue engagement with firms on breach data and oversight practices. Firms are encouraged to assess whether staff understand their record-keeping responsibilities and whether senior leaders are setting appropriate behavioral expectations.

EU Commission consults on updated technical rules implementing the MiFIR Review

The EU Commission is consulting on amendments to align technical rules with recent changes to MiFIR on the obligation to provide market data on a reasonable commercial basis, the determination of what constitutes a liquid market for equity instruments, and the definition of and disclosure for post-trade risk reduction services. 

In detail:

The draft rules propose:

• Amending the definition of ‘liquid market’ by replacing the ‘free float’ criterion with the ‘market capitalisation’ criterion, in line with the amendments to the definition of ‘liquid market’ laid down in MiFIR, and clarify certain other issues around the liquidity assessment for equity instruments;
• Deleting provisions that clarify what constitutes a ‘reasonable commercial basis’ for trading venues and SIs in line with the changes introduced to Article 13 of MiFIR and the specific regime for the concept of RCB;
• Deleting the provision which specifies the size specific to the financial instrument for the purposes of the requirements applicable to SIs in respect of non-equity instruments. This follows from the deletion of pre-trade transparency requirements for Sis in respect of non-equity instruments.
• Specifying what constitutes PTRR services for the purposes of the exemption of Article 31(1) MiFIR. ESMA will deliver future technical advice on the issue. 
• Deleting publication requirements for portfolio compression services. This follows from the deletion of the obligation for investment firms and market operators who provide portfolio compression services to make public through an APA the volumes of transactions subject to portfolio compressions and the time they were concluded.

Next steps: The consultation closes on 5 September 2025. Then, the EU Commission will adopt the final text, to be subject to scrutiny by the Council and European Parliament before finalisation and entry into force. 

New Brazilian framework for credit, financing and investment companies (SCFIs)

The regulation is the result of a consultation launched by the Central Bank of Brazil in 2024, and comes into force from September 2025. The aim is to modernise and consolidate rules that have become outdated and resulted in a fragmented, inefficient set of legislation. 

The new rules keep the minimum paid-in capital of 7 million reals but offer a 30% reduction in this requirement should an institution be headquartered outside of São Paulo or Rio de Janeiro. This is part of a wider government initiative to encourage financial firms to grow in other cities in Brazil. 

The focus of the new regulation is still credit but widens the scope of activities that SCFIs can undertake to include the following:

• The issue of electronic money and post-paid instruments.
• To function as an initiator of payment transactions – for example, via Pix.
• To participate in foreign exchange markets to trade securities, and manage securities portfolios.
• To serve as regulated fiduciary agents and insurance representatives. 

This means that an SCFI can deliver credit and payment services, and asset management offerings, with a single license instead of multiple ones. 

As well as streamlining the regulation for SCFIs this new legislation creates a more competitive, transparent landscape for the regulatory evolution of fintechs and digital financial services.

Vietnam to launch central clearing counterparty system in 2027

Vietnam’s State Securities Commission (SSC) has released a detailed roadmap to implement a central counterparty (CCP) clearing system for its cash equity market, targeting an official launch in the first quarter of 2027. The plan, approved by the Ministry of Finance, outlines a multi-year, phased approach that includes finalising the legal framework this year, establishing a new clearing entity under the Vietnam Securities Depository and Clearing Corporation (VSDC), and conducting extensive market-wide testing throughout 2026. This initiative represents a major step in modernising Vietnam’s market infrastructure to reduce settlement risk and align with international standards.

In more detail: The initial phase of the roadmap, which took place in the first half of 2025, focused on finalising the legal and accounting frameworks by drafting new circulars to replace existing regulations. The current phase, for the second half of this year, is dedicated to corporate structuring. This will involve establishing a new, dedicated subsidiary of the Vietnam Securities Depository and Clearing Corporation (VSDC) named the “Vietnam Securities Clearing One Member Company Limited,” which will be responsible for all CCP functions.

The full year of 2026 is designated for market-wide operational readiness. During this period, the VSDC will issue “clearing member certificates” to qualified participants and conduct extensive system testing, training, and workshops in collaboration with all market members. The roadmap explicitly requires market participants, such as brokerages and investment firms, to review and prepare their own IT infrastructure to ensure full compatibility with the new system ahead of the launch.

Next steps:

• H2 2025 – establishment of the New CCP Entity: the primary focus for the remainder of this year is the formal establishment of the “Vietnam Securities Clearing One Member Company Limited” as a subsidiary of the VSDC, including the finalisation of its charter and operational rulebooks.
• Full Year 2026 – Market Preparation and Testing: the VSDC will work with all market participants on system integration, user training, and comprehensive testing to ensure operational readiness. Market members will be required to obtain their clearing member certificates during this period.
• Q1 2027 – Official Launch: the CCP mechanism for the cash equity market is scheduled to go live, with the newly established VSDC subsidiary leading the official implementation.

SEBI proposes introduction of closing auction session (CAS) in equity cash market

The Securities and Exchange Board of India (SEBI) has released a revised consultation paper proposing the implementation of a Closing Auction Session (CAS) for the equity cash segment. The objective is to improve transparency, reduce end-of-day volatility, and enhance price discovery quality—particularly important for index-tracking passive strategies. The proposal reflects SEBI’s earlier consultations and aligns India’s practices with leading global exchanges such as NYSE, LSE, Euronext, and HKEX.

Scope: The proposed CAS will apply to all stocks eligible for trading in the derivatives segment, expanding coverage beyond the initially suggested Nifty 50/Sensex 30 set. This broader scope responds to stakeholder feedback and is intended to reduce tracking error for passive funds, where precision in closing prices is critical.

Key design elements: 

• Session design and timing: SEBI has proposed that the CAS will run from 3:15 pm to 3:35 pm, comprising four phases intended to balance liquidity concentration with orderly price discovery. 
• Price band: A ±3% price band around the reference price to contain excessive volatility during the auction window. 
• Order execution priority: Market orders will be given execution priority to improve fill certainty, particularly for passive funds and institutional traders. This approach may also be adopted for pre-open session.
• Disclosures: Real-time publication of indicative prices, cumulative quantities, and market order imbalances to enhance transparency and promote informed participation.
• Extension of derivatives trading time: The equity derivatives market will remain open until 4:00 pm even though CAS concludes at 3:35 pm. This is intended to help participants hedge residual or unmatched positions that may arise from closing auction outcomes, and to ensure better risk alignment across markets.

Additional proposal: Flexibility for passive mutual funds SEBI has also proposed allowing passive mutual funds (ETFs and index funds) to borrow overnight for liquidity management, specifically to handle temporary shortfalls on index rebalancing days. Currently, borrowing is permitted only for redemptions or distribution-related purposes. The change is intended to ease operational constraints created by CAS implementation. 

Next steps: SEBI has invited public comments on 13 specific proposals contained in the paper. The deadline for submissions is September 12, 2025.